New private home sales drop 49%, but tipped to increase as prices fall

New private home sales slumped 49 per cent last month from the previous month in the absence of fresh project launches during the traditionally lull year-end period, with property analysts projecting that sales will pick up in the months ahead, especially with prices expected to fall further.

Developers here sold 384 private residential units last month, data from the Urban Redevelopment Authority (URA) showed today (Jan 15), down sharply from 759 in November. For the whole of last year, developers sold 7,528 units, 2.9 per cent higher than the 7,316 homes sold in the previous year. This was achieved despite the launch of just 7,063 private homes, down 8 per cent from 2014’s 7,693 units.

Analysts said instead of a turn in sentiment, the year-on-year increase in sales was due to developers’ efforts to clear unsold stock, as well as price declines that have attracted some buyers to the market.

“The quality of launches matter and buyers have become more price-sensitive, so when the price is attractive, you have a higher chance of (making) sales. Prices today have come down to early-2011 levels. I believe that has brought back some buyers who have been waiting,” said Mr Chris Koh, director of property firm Chris International.

By the fourth quarter of 2015, private home prices had fallen in nine consecutive quarters, marking the longest losing streak in 17 years, as cooling measures and loan curbs continued to weigh on the market. For the whole of last year, prices fell 3.7 per cent, preliminary URA data showed earlier this month, and analysts said the downtrend will continue given the growing number of unsold units in existing projects at a time when mortgage costs are rising.

“Developers are likely to price the projects more realistically going forward in view of the weaker demand in the higher-interest-rate environment. We expect more relaunches to surface, a strategy that has helped some developers to clear inventories in the quickest possible way,” said Ms Christine Li, research director at property firm Cushman and Wakefield.

“Developments that are reaching their five-year deadline for Additional Buyers’ Stamp Duty remission are also likely to step up their marketing efforts to move sales in order to avoid the hefty payments otherwise,” said Mr Eugene Lim, key executive officer at property agency ERA.

Barring any shocks, most analysts expect activity in the private housing market to pick up after Chinese New Year, with sales projections for this year ranging between 7,500 and 8,500 units. However, Mr Ong Teck Hui, JLL’s national director for ­research and consultancy, pointed to larger forces at play.

“While the cooling measures and rising interest rates will continue to moderate demand, it is the magnitude of the economic slowdown that is most likely to determine buying sentiment in 2016 … A more severe economic slowdown would spark caution among buyers, reduce demand and lead to lower market activity than 2015,” he warned.

Last month, the Outside Central Region (OCR), or suburbs, dominated new home sales, with developers selling 213 private homes in this area. The Rest of Central Region (RCR), or city fringes, followed with 153 transactions, while the Core Central Region (CCR), or city centre, clocked just 18, said the URA.

Amid the dearth of new projects last month, The Poiz Residences in Potong Pasir emerged as the best-selling project after offloading 64 units at a median price of S$1,430 per sqf. The project was launched in November. It was followed by Sky Vue in Bishan, where 20 units were sold at a median price of S$1,571 per sqf.

In the executive condominium (EC) segment, sales fell to a six-month low after yet another month without a new launch. URA data showed that developers sold 124 EC units last month, 33 per cent lower than the 186 units in November. For the whole year, developers sold about 2,600 ECs, up 63 per cent from 2014. This came on the back of a 50 per cent increase in launched units, from 2,505 in 2014 to 3,750 last year.